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NEC
(6701)
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Rating:76Outperform
Price Target:
¥5,652.00
▲(33.02% Upside)
Action:Reiterated
Date:07/31/26
The score is driven primarily by improved financial performance (margin and return uplift with a solid balance sheet), supported by a strong price trend above all major moving averages. These positives are tempered by cash-flow volatility (recent FCF decline), uneven top-line growth, and a valuation profile that offers limited dividend support at a ~22x P/E.
Positive Factors
Balance sheet strength
NEC's materially stronger balance sheet — moderate leverage (~0.22x equity) and growing equity (2.23T) — provides durable financial flexibility to win and fund multi-year public contracts, absorb project timing shocks, and invest in strategic tech without immediate refinancing pressure.
Negative Factors
Uneven top-line growth
Inconsistent revenue trajectory and a recent negative annual period highlight dependence on large tenders and cyclical projects. Persistent top-line lumpiness complicates capacity planning, obscures organic demand trends, and can undermine margin sustainability if high-margin projects ebb.
Read all positive and negative factors
Positive Factors
Negative Factors
Balance sheet strength
NEC's materially stronger balance sheet — moderate leverage (~0.22x equity) and growing equity (2.23T) — provides durable financial flexibility to win and fund multi-year public contracts, absorb project timing shocks, and invest in strategic tech without immediate refinancing pressure.
Read all positive factors
NEC (6701) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
¥6.44T
Dividend Yield0.8%
Average Volume (3M)4.22M
Price to Earnings (P/E)21.0
Beta (1Y)0.83
Revenue Growth6.90%
EPS Growth50.30%
CountryJP
Employees101,800
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)225.92
Shares Outstanding1,364,249,300
10 Day Avg. Volume5,395,680
30 Day Avg. Volume4,216,096
Financial Highlights & Ratios
PEG Ratio0.35
Price to Book (P/B)2.33
Price to Sales (P/S)1.43
P/FCF Ratio13.91
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
¥6,020.00Price Target Upside41.68% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)221.54
Revenue Forecast (FY)¥3.69T
NEC Business Overview & Revenue Model
Company Description
NEC Corporation provides information technology services and social infrastructure in Japan and internationally. The company offers systems integration services, including system construction and consulting, maintenance support, and outsourcing, a...
How the Company Makes Money
NEC primarily makes money by selling and operating technology solutions and services under multi-year contracts, combining upfront system delivery revenue with ongoing recurring service fees. Key revenue streams include: (1) Systems integration an...
NEC Earnings Call Summary
Earnings Call Date:Apr 28, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Nov 03, 2026
Earnings Call Sentiment Neutral
The earnings call highlights several positive outcomes, including record revenue and profit growth, strong performance in IT services, and significant free cash flow increase. However, these are balanced by notable challenges such as losses in the submarine cable business and investment outflows. Thus, the overall sentiment is mixed, with a balance of achievements and challenges.Positive Updates
Record Revenue and Profit Growth
Revenue for FY March 2025 was JPY3,423.4 billion, with a non-GAAP operating profit (OP) of JPY311.3 billion, achieving the mid-term management plan's targets a year ahead of schedule. Revenue increased by 5.3% year-on-year, and non-GAAP OP increased by JPY98.9 billion.
Negative Updates
Submarine Cable Business Loss
The submarine cable business recorded a JPY14 billion loss due to force majeure issues, resulting in project delays and additional costs.
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Q4-2025 Updates
Positive
Negative
Record Revenue and Profit Growth
Revenue for FY March 2025 was JPY3,423.4 billion, with a non-GAAP operating profit (OP) of JPY311.3 billion, achieving the mid-term management plan's targets a year ahead of schedule. Revenue increased by 5.3% year-on-year, and non-GAAP OP increased by JPY98.9 billion.
Read all positive updates
Company Guidance
In the recent call, the company provided guidance for the fiscal year ending March 2026, projecting revenue of JPY3.36 billion and a non-GAAP operating profit (OP) of JPY320 billion. This represents an increase of JPY20 billion from the mid-term management plan target, despite macroeconomic uncertainties. The adjusted OP is expected to be JPY310 billion, factoring in ongoing structural reforms. The IT services segment is projected to post revenue of JPY2.15 trillion with an adjusted OP of JPY263 billion, while social infrastructure is expected to achieve revenue of JPY1.16 trillion and adjusted OP of JPY100 billion. The company also noted plans to increase investment in growth areas while maintaining a disciplined approach to capital allocation, applying cash ROIC evaluation for M&A transactions. The guidance reflects a continued focus on increasing profitability, even amid challenging conditions, and highlights strategic efforts to enhance operational efficiency and future growth potential.NEC Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
84
Very Positive
Cash Flow
66
Positive
| Breakdown | TTM | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.69T | 3.58T | 3.42T | 3.48T | 3.31T | 3.01T |
| Gross Profit | 1.23T | 1.18T | 1.06T | 1.01T | 958.25B | 886.41B |
| EBITDA | 601.24B | 570.85B | 422.03B | 382.92B | 356.76B | 330.96B |
| Net Income | 300.62B | 270.23B | 175.18B | 149.52B | 114.50B | 141.28B |
Balance Sheet | ||||||
| Total Assets | 4.51T | 4.47T | 4.32T | 4.23T | 4.04T | 3.82T |
| Cash, Cash Equivalents and Short-Term Investments | 434.70B | 659.03B | 584.62B | 476.49B | 419.46B | 430.78B |
| Total Debt | 591.37B | 489.21B | 666.36B | 573.64B | 608.48B | 597.38B |
| Total Liabilities | 2.19T | 2.18T | 2.24T | 2.14T | 2.13T | 2.04T |
| Stockholders Equity | 2.23T | 2.20T | 1.95T | 1.92T | 1.62T | 1.51T |
Cash Flow | ||||||
| Free Cash Flow | 266.15B | 368.14B | 218.00B | 171.46B | 74.41B | 76.41B |
| Operating Cash Flow | 345.58B | 438.46B | 344.41B | 271.23B | 152.13B | 147.52B |
| Investing Cash Flow | -371.04B | -96.15B | -242.17B | -76.02B | -49.59B | -63.38B |
| Financing Cash Flow | -92.46B | -288.12B | 7.03B | -155.51B | -122.79B | -189.62B |
NEC Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | ¥6.44T | 20.98 | 13.30% | 0.89% | 6.90% | 50.30% | |
73 Outperform | ¥6.35T | 20.18 | 22.80% | 1.52% | 1.80% | -13.55% | |
71 Outperform | ¥716.42B | 23.16 | 11.50% | 2.24% | 13.99% | 15.49% | |
70 Outperform | ¥848.85B | 17.31 | ― | 2.29% | 4.90% | -2.39% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
55 Neutral | ¥2.57T | 143.74 | 3.29% | 1.56% | 7.37% | -80.70% |
* Technology Sector Average
JP:6701
NEC
4,631.00
131.39
2.92%
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-25.97%
NEC Corporate Events
NEC Posts Q1 FY27/3 Results and Overhauls Segment Reporting
Jul 29, 2026
NEC Corporation has released its financial results for the first quarter of the fiscal year ending March 31, 2027, alongside updated forecasts for the full fiscal year. The disclosure includes net profit attributable to owners of the parent and pr...
NEC Delivers Strong Q1 Earnings and Tightens Focus on Non-GAAP Profit Metrics
Jul 29, 2026
NEC reported strong results for the three months to June 30, 2026, with revenue rising 14.5% year-on-year to ¥819.8 billion and operating profit jumping 66.1%. Net profit attributable to owners of the parent surged 157.4%, while non-GAAP oper...
NEC Reshapes Segments and Profit Disclosure Ahead of FY2027
Jul 10, 2026
NEC Corporation is a major Japanese ICT provider offering telecom and IT services and solutions, and it organizes its operations into distinct reportable segments aligned with network, computing and digital transformation markets. The company is l...
NEC to Absorb Key IT Subsidiary in AI-Focused Reorganization
Jul 1, 2026
NEC plans to merge with its wholly owned subsidiary, NEC Solution Innovators, through an absorption-type merger effective October 1, 2026, with NEC as the surviving entity and no new shares issued. The move simplifies the group structure by integr...
NEC Seeks Shareholder Approval to Enable Virtual-Only General Meetings
May 12, 2026
NEC plans to amend its Articles of Incorporation to allow general meetings of shareholders to be held without a designated physical location, subject to shareholder approval at its 188th Ordinary General Meeting on June 19, 2026. The move leverage...
NEC Slashes Dividends as It Resets Capital Return Policy
May 12, 2026
NEC Corporation’s board has approved a year-end dividend of 22 yen per share for the fiscal year ended March 31, 2026, with total payments amounting to 29,227 million yen sourced from retained earnings. The payout marks a sharp reduction fro...
NEC Unveils Five-Year Mid-term Management Plan 2030
May 12, 2026
NEC Corporation has introduced its “Mid-term Management Plan 2030,” a five-year strategy spanning fiscal 2026 to fiscal 2030 that is intended to guide the company’s operations and corporate direction. The plan is expected to shap...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.